Hdtv Is Making Move From Pipe Dreams To Reality

Investing

February 06, 1993|By STEVE HALPERN Columnist

High definition television, long considered a technology of the future, is rapidly becoming a technology of today. HDTV sets are available in Japan, and regulators and manufacturers are focusing on the entry of HDTV into the American market.

Stephen Leeb, editor of Personal Finance, from Alexandria, Va., notes, ``HDTV technology is moving from pipe dream to reality. HDTV offers a razor-sharp clarity that puts today's TV pictures to shame; it will propel the advancement of electronic technology around the world. HDTV is a digital medium that promises to make analog broadcasts obsolete, just as compact discs threw vinyl LPs into the technological dustbin. Visionaries see HDTV as the path to the brave new world of interactive TV and the use of home TVs as computers.''

Below are Leeb's top picks among those companies expected to benefit from the development of HDTV:

Texas Instruments

New York Exchange (Symbol: TXN)

52-week range: 31 1/2-59 1/4

Friday's close: 53 3/4

``Texas Instruments manufactures products in the electronics industry and digital products such as multiuser personal computers. TI is a major player in all three world markets where HDTV systems are under development. In Japan, TI is in joint ventures with major HDTV players for development of advanced signal decoders. As a major semiconductor maker, TI has a vital stake in HDTV technology, with flat-panel display capabilities and other advanced digital-imaging technologies under development. Meanwhile, TI continues to wrack up impressive financial results. Buy.''

Corning

New York Exchange (Symbol: GLW)

52-week range: 28 3/4-39 7/8

Friday's close: 36

``Corning dominates the market for fiber optics, the likely pathway for HDTV and other advanced telecommunications. Demand for fiber optics should explode during the next decade, especially as HDTV comes to fruition. Corning's finances are rated A by Standard & Poor's, and debt is only one-third of equity. Moreover, the company generates a healthy $3 per share in excess cash, so financing future expansion shouldn't be a problem. The stock rates a hold at current prices; it's a buy on dips to below 35.''

Varian

New York Exchange (Symbol: VAR)

52-week range: 33 1/2-45 1/8

Friday's close: 45 3/8

``Varian manufactures electron devices, semiconductor equipment and medical devices. Per-share earnings dipped from $2.95 in 1991 to $2.05 in 1992, largely due to the weak economy. However, that figure should grow to $2.75 in 1993, as the economy improves. With more than $1.3 billion in annual sales and a relatively low price-to-earnings ratio of less than 10, based on estimated 1993 earnings, this stock is more appropriate for the risk-averse. The stock is a buy at current prices.''

Alpine Group

American Exchange (Symbol: AGI)

52-week range: 5 3/8-14 7/8

Friday's close: 9 3/4

``Alpine Group is finally seeing years of research pay off. The company has unveiled Polyvision, a low-cost, patented video display that's superior to anything on the market in terms of contrast, resolution and speed. By applying electricity to a layer of film within the display glass, a chemical reaction is produced that creates a high-contrast electronic image. As the HDTV market grows, so will demand for advanced flat-panel displays. The company is still in the red, since most of its products remain in the development stage. This stock is thus riskier than its larger brethren, but the company is a pure play on HDTV that's bestowed with unique, high-quality technology and solid management. Buy at current prices.''

Scientific-Atlanta

New York Exchange (Symbol: SFA)

52-week range: 10 5/32-30 3/8

Friday's close: 24 1/8

``Scientific-Atlanta is an innovative producer of communications equipment. Its products have spearheaded technological advances in satellite communications and cable television. Scientific Atlanta's markets will grow like gang busters during the 1990s. Having devoted considerable money to R&D in recent years, the company has a strong line of products that enable cable operators to efficiently adapt the capability of their systems from analog to digital. The stock's P/E is high, but not untouchable in light of growth prospects.

Analog Devices

New York Exchange (Symbol: ADI)

52-week range: 8 5/8-18 3/4

Friday's close: 16 1/2

``Analog Devices makes high-performance linear integrated circuits, a potentially lucrative HDTV niche. Analog recently started developing a high-speed analog-to-digital converter for use in HDTV sets. This device transforms the TV signal broadcast through the air to a digital signal used to produce the rapidly changing high-definition picture. Another boost is the company's growing international presence. Analog's per-share earnings have grown at a healthy pace, from $0.17 in 1991 to $0.30 in 1992. Earnings should reach at least $0.60 a share in 1993. Buy.''

Projectavision

Over the counter (Symbol: PJTV)

52-week range: 3 1/8-7 1/4

Friday's close: 5 1/8

``Projectavision is our favorite pure play on HDTV. We stress that this is a high-stakes investment with above-average risk. The company has a TV projection technology that produces high-resolution pictures that are bright and sharp enough to be displayed on walls or billboards. As HDTV comes on line, this product should capture a major share of the big-screen market. In 1989, the firm won a $1 million contract with the U.S. Defense Advanced Research Projects Agency to develop prototype video projectors for potential use with HDTV screens. The firm beat out more than 80 major companies to win the contract. The company has no sales or earnings, and if its products fail to catch on, the stock would plummet. But our price goal of roughly 15 makes that risk worth taking. Buy on price dips below 5.''